In the final days of its November term, the Illinois Supreme Court allowed a petition for leave to appeal in McVey v. M.L.K. Enterprises, LLC. McVey, a case from the Fifth District, presents the following question: must attorneys’ fees and costs be deducted from a tort settlement before a lien under the Health Care Services Lien Act is paid?

McVey arose from an accident in a bar. The plaintiff settled her lawsuit with the employer of the tortfeasor. A petition to adjudicate liens was filed pursuant to the Illinois Health Care Services Lien Act by the hospital which treated the plaintiff. The trial court awarded the hospital $2,500, declining to deduct the plaintiff’s attorneys’ fees from the settlement before calculating the lien. In doing so, the trial court found that the Fifth District’s decision in Stanton v. Rea was in conflict with the Supreme Court’s decision one year before Stanton in Wendling v. Southern Illinois Hospital Services.

The Appellate Court reversed. The only distinction between Stanton and McVey, the Court wrote, was that Stanton involved a judgment entered after a jury verdict. But the Lien Act treated jury verdicts and settlements the same way, so that wasn’t a difference that made a difference.

According to the Stanton court, lienholders are limited to 40% of a judgment, and if lienholders receive 40%, then attorneys liens are limited to 30% of the judgment. Therefore, the court concluded, the legislature intended that tort plaintiffs receive at least 30% of the judgment. For that to be possible, attorneys’ fees had to be deducted from the judgment before applying the health care liens. The Court found that Stanton required reversal in McVey.

As for the trial court’s view that Stanton was in conflict with McVey, the court pointed out that it had addressed that argument in Stanton itself, concluding that Wendling was about the common fund doctrine rather than the Act. The Court found that its original rationale was still valid. The hospital also pointed to a new section of the Act, effective January 1, 2013, which allegedly found that fees are not to be deducted from subrogation claims. The Court held that given that no subrogation was involved in McVey, the new section didn’t apply.

We expect McVey to be decided in eight to ten months.

Image courtesy of Flickr by Lydia (no changes).